Basic economics discussion for those confused

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  1. weholdthesetruths profile image61
    weholdthesetruthsposted 13 years ago

    I see a lot of talking about how America's manufacturing and industrial base has left the country.  And then, they complain that "greedy corporations" did it.  Fascinating.  The purpose of every business is to make money.  The only place where the purpose of business was not to make money, was the former USSR.  Business didn't make money there.  It was a jobs program to keep the unemployment rate at 1 percent.   

    Just remember that took you about 3 years to get a new refrigerator, and nearly 10 years to get on the list to get a new Trabant.  It took over a year to get a TV.  That generally didn't last more than a year, because it often blew up.

    And when the crops failed in the USSR, people started starving. 

    So, what is that hidden factor that has kept us from starving?  Capitalism.  Greed.  Corporations.  Farmers that have to compete globally. 

    So, why did all the appliance makers start moving production somewhere else?   Because it was cheaper to do that.  Why did nobody start up here to take their place?   Because we tax investment.  There's an axiom that says if you don't want it, you'll get less.   And, we've done that.  We've taxed our industrial base until it's nearly gone.  First, the Unions did the "wages out of scale with the value of the job" tax, then the government started the "tax the investment, tax the profits, tax the employees" riff.  And then came the hidden taxes... You know, mandates and extreme environmental regulation that add big to the cost of doing things.   

    Nothing you can do will keep an overtaxed industrial base here.  It cannot be forced.  Business will go where it is wanted.  Where it is NOT wanted, is where it is taxed (all those kinds of taxes)  But we MUST produce something, for there to be wealth.  Wealth must be created.   Initially, when our smokestack industries started moving away, Americans moved upscale.  We began to do engineering, design, technology development.  But, we figured out ways to tax that and started driving it offshore. 

    So, what can you do?   Do the obvious.  Stop taxing production of wealth.  Stop taxing employment.  Stop taxing through mandates and other expensive obstructions.   Yes, business WILL move back here, if we make it inviting to do so.   Cut corporate tax rates to 0.  Cut capital gains to 0.  Cut the death tax to 0.   Don't tax investment or dividends.  They'll RUSH to our shores, instead of fleeing to more friendly places.  HEck, our businesses are moving to CANADA to escape our heavy handed taxes.   Even the Canadians figured out if you tax too much, business leaves.   

    But, we've been run by ideologues, who believe that business is the enemy of the people and as such, has driven it away.  We can't get rich mowing each other's lawns and serving happy meals to each other.  We can't even survive doing that.

    Stimulus dollars spent don't work, because it merely gets spent.  No wealth is created.  No productivity is increased by it.  "Stimulus" jobs have price tags of 400,000 to 5 million EACH.  Small wonder it makes no difference in unemployment.   It takes less private investment in manufacturing to produce jobs than that, and the jobs are permanent and produce wealth. 

    The question to you is... Are you willing to allow industry to return, or are you so dead set in your ideology that you'd rather bankrupt and collapse the nation?

    1. Jackson Riddle profile image49
      Jackson Riddleposted 13 years agoin reply to this

      Hear Hear!

    2. kerryg profile image84
      kerrygposted 13 years agoin reply to this

      Taxes are hardly the only cause of jobs being shipped overseas.

      What about cheaper labor abroad, and fewer regulations on how employees can be treated? Just the other day I read an article about the ag sector's troubles with American employees. Even with unemployment in double digits in many parts of the US, farmers can't get Americans who will settle for the ridiculously low wages, long hours, and hard physical labor required by industrial agriculture, so they have to keep importing Mexicans, legally or illegally. Investigators have found literal slavery in the tomato fields of Florida. When you can get away with paying people pennies (or nothing at all) for 12, 14, or 16 hour workdays six days a week, of course your profits are going to be higher!

      What about fewer environmental regulations abroad? Shell has inflicted the equivalent of an Exxon Valdez every year on Nigeria for more than half a century; in Ecuador, Texaco dumped 18 billion gallons of toxic wastewater in local rivers, creating an explosion of cancer and birth defects in nearby towns and villages. Again, when you can just dump toxic materials into air, water, and soil without regard to the consequences, of course your profits are going to be higher!

      The question is, do we really want to live in a country (or a world, for that matter) where these things are possible?

      1. Evan G Rogers profile image60
        Evan G Rogersposted 13 years agoin reply to this

        so, with cheaper labor abroad getting more work, their labor wages will be bid higher and higher. Then, gradually, they will have more capital accumulated, and thus they can buy more things.

        I dunno. It's hard to argue that "paying people more money than they normally would" is a bad thing.

        Oh, and about the oil spills... Yeah, they sucked. But seriously? that's your complaint? "My modern life is made possible because these ginormous companies are able to ship trillions of tons of oil around the world every day... but about once every ten years some of it spills in the ocean. OIL COMPANIES SUCK!!!!"

        Remember the good ol' days, when cars and the rest didn't exist? and instead of oil spills we had horses walking around the town crapping and pissing freely on the street?

        Yeah... that was ... better...

        1. kerryg profile image84
          kerrygposted 13 years agoin reply to this

          "I dunno. It's hard to argue that "paying people more money than they normally would" is a bad thing."

          You're not looking at the context. NAFTA allowed the US to flood Mexico with cheap, subsidized US corn, thus driving Mexican farmers bankrupt and making them so desperate for work that they would accept pennies (or nothing) for 12, 14, or 16 hours a day, six days a week of hard physical labor.

          The same pattern repeats around the world. In Indonesia, palm oil companies are stealing land from indigenous communities, then offering them a "deal" whereby they become contract farmers for the palm oil company. They then have to work for the company to pay off their "debt" for oil palms, fertilizer, and other supplies, and because their oil palms don't actually start producing for years, while still requiring fertilizer, water, etc., by the time the palms start producing, they're typically so far in debt to the company that they are essentially indentured servants. Additionally, they've gone from having forest gardens that produce a diverse mix of food, wood, and other products that they can sell or use for their own families to having only one product that they can't eat or use themselves during times of hardship, making them dependent on government or foreign aid should food prices rise or the oil palm crop fail, putting them more in debt...

          These are just two examples of thousands from around the world.

          "Oh, and about the oil spills... Yeah, they sucked. But seriously? that's your complaint? "My modern life is made possible because these ginormous companies are able to ship trillions of tons of oil around the world every day... but about once every ten years some of it spills in the ocean. OIL COMPANIES SUCK!!!!""

          I guess you missed the part about 11 million barrels of oil spilling into the Nigerian Delta every single year for 50 years. There are dozes of small scale oil spills around the world every year. If you'd paid attention to the news during the Gulf disaster you may have noticed that there were two smaller spills in the United States during the same period: one in Utah which briefly threatened to contaminate the Great Salt Lake and one in Michigan that spilled about 800,000 gallons into the Kalamazoo River.

          "Remember the good ol' days, when cars and the rest didn't exist? and instead of oil spills we had horses walking around the town crapping and pissing freely on the street?"

          Nobody is saying that we should go back to horse and buggy days, though for short trips I don't personally think it's such a bad idea. I like horses. tongue Also, oil contaminates soil; horse manure enriches it. People used to grow substantial quantities of food in cities, thanks partly to having a steady supply of manure to keep the soil from getting depleted.

          Regardless, though, since we know that oil is:

          * a finite resource
          * an environmental nightmare to extract
          * an environmental nightmare to burn (even if you don't believe in anthropogenic global warming, burning fossil fuels dumps dozens of different carcinogens and suspected carcinogens into the air, raising rates of asthma and other lung problems)
          * concentrated mainly in regions full of dangerously unstable governments, religious fanatics, and other psychos we are better off staying the hell away from

          shouldn't we be throwing everything we have at developing and spreading cleaner, safer, more local alternatives? Instead, we're subsidizing oil companies to the tune of tens of billions of dollars a year. (Probably hundreds, if you incorporate the many other ways people are encouraged to be more dependent on oil, such as agricultural subsidies benefiting massive, oil dependent industrial agriculture.) And then they have the gall to complain that we're "taxing them to death!"

        2. profile image0
          Texasbetaposted 13 years agoin reply to this

          One screws up your shoes and smells and the other destroys an entire ecosystem for thousands of years. Don't be an idiot.

      2. Ralph Deeds profile image68
        Ralph Deedsposted 13 years agoin reply to this

        True. and one fact Weholdthese"truths" failed to mention is that in addition to cheap labor, no safety or environmental regulations in China and other low wage countries, U.S. tax law provides a powerful incentive for moving jobs overseas--i.e., overseas profits are not taxed in the U.S. unless and until the profits are re-patriated, i.e., returned to the books of the U.S. corporation. This giant loophole produces two results: 1. The use of unrealistic transfer prices and other accounting tricks to reduce profits from operations in the U.S. and increase profits in other countries. And 2. Retention and reinvestment of profits in other other countries rather than the United States.

        Another factor in the migration of our manufacturing industry to China is China's manipulation of the value of its currency to keep it low which promotes Chinese exports to the U.S. and penalizes U.S. exports to China. The effect is that American workers are crucified on a cross of free but unfair trade.

    3. dutchman1951 profile image62
      dutchman1951posted 13 years agoin reply to this

      well said  we hold, very well said

  2. Evan G Rogers profile image60
    Evan G Rogersposted 13 years ago

    "Unemployment is too high!!!"

    "We need to raise minimum wages!!!"

    Can anyone see what's wrong with demanding both of those things?

    1. Ralph Deeds profile image68
      Ralph Deedsposted 13 years agoin reply to this

      "The national debt is too high! And we need to cut taxes! Anybody see anything inconsistent with that?

      1. weholdthesetruths profile image61
        weholdthesetruthsposted 13 years agoin reply to this

        Nope.   Both are true.

  3. Flightkeeper profile image66
    Flightkeeperposted 13 years ago

    Weholdthesetruths, I understand where you're coming from. I think definitely it was the rise of the unions and their members' greed that made their labor too expensive.  Initially the unions were there to make sure that they had safe working conditions, but once they got into cahoots with politics they got too corrupt.  The public unions even more so. 

    As for going overseas, there are some products that are so cheap that cheap labor is the only way to make it and they have to go overseas.

    You can blame unions and they will continue to get their comeuppance, look at California and New York.  But market forces are also in play and will continue to force businesses to have their manufacturing done overseas.

    1. Ralph Deeds profile image68
      Ralph Deedsposted 13 years agoin reply to this

      You expect American  auto workers to compete on level ground with Chinese workers paid 90 cents an hour in unsafe plants spewing pollution into the world's environment? U.S. auto workers' wages were cut in half last year in an effort to become competitive with success remaining doubtful in the face of coming imports of cheap cars from China and India. What is the current situation?--hundreds of thousands of unemployed workers whos unemployment compensation is running out and no jobs available. Amd what is the GOP solution?--reinstate the Bush tax cuts for the top 2% richest Americans who are having trouble making their payments on their Land Rovers and multiple McMansions.

      1. Flightkeeper profile image66
        Flightkeeperposted 13 years agoin reply to this

        That's the reality. What's your point?  You're going to force businesses to hire american workers and go out of business? lol

        1. Ralph Deeds profile image68
          Ralph Deedsposted 13 years agoin reply to this

          No, I'm suggesting that free trade should be fair trade and, if it is determined that our country as a whole benefits from it, that the workers who are displaced as a result are owed by the majority more help than currently provided--higher and longer unemployment benefits, job insurance, retraining and relocation allowances and so forth. Moreover, as I said above some of the loopholes which currently artificially incentivize outsourcing jobs to china should be closed. Currently, in Michigan around a half a million unemployed workers unemployment benefits are about to run out, but there are no jobs available for them. We are headed for a social crisis not seen since the 1930s. (When the Communist Party fielded a candidate for mayor of Detroit.)

          1. Flightkeeper profile image66
            Flightkeeperposted 13 years agoin reply to this

            What makes you think workers are owed a job?  They got paid for their labor with a salary and benefits.  It is up to the worker to be viable as an employee to be hired.  What justification is there for higher and longer unemployment benefits?  So you want people who are employed who are now overworked because they are doing the work of two people for the same salary to be taxed higher? lol

            Michigan made their bed when they catered to only one industry, the auto industry.  They definitely had their boom times.  If those workers don't retrain themselves for other work so that they can leave Michigan and get work elsewhere why is that the fault of businesses?

            1. Ralph Deeds profile image68
              Ralph Deedsposted 13 years agoin reply to this

              How will they feed themselves and their families while "retraining themselves"? How will they pay the required tuition? Something akin to the GI Bill would help.

              1. Flightkeeper profile image66
                Flightkeeperposted 13 years agoin reply to this

                What makes you think that they don't get help from the government?  The Obama adminstration passed out grants so that people could retrain themselves while they were unemployed.  People who were unemployed got 99 weeks of benefit.  That's more than a year. It's up to people to do for themselves.

                1. Ralph Deeds profile image68
                  Ralph Deedsposted 13 years agoin reply to this

                  True, some meager retraining allowances are available as well as food stamps and charity soup kitchens.

                  1. Flightkeeper profile image66
                    Flightkeeperposted 13 years agoin reply to this

                    Turning down your nose at help are you? And that help was not meager.  It just goes to show me that you're really not interested in solutions as much as you are trying to persuade people to socialism.

      2. weholdthesetruths profile image61
        weholdthesetruthsposted 13 years agoin reply to this

        Ralph, not only can Americans compete with Chinese being paid $1 an hour, they can OUT COMPETE AGAINST THEM.    You really really DO NOT KNOW MUCH ABOUT MAKING STUFF.   

        You see... An American built tractor costs $190,000.   A comparable Chinese designed and built tractor costs $65,000.    But the American one is A FAR BETTER VALUE.    It's reliable, it lasts many times longer, parts are available, and it performs rings around the lousy chinese junk.    Same with cars, same with.. (insert favorite thing here).   

        The price of labor is only a small part of what makes up competition...   American workers produce several times the value per hour that Chinese workers do, they consistently do fantastically better quality than the Chinese do, as well.     By the time you put all of this together, you can build a car in the US and make money selling it, often for 3 times what it would cost from China, and it will outsell what's made in China.    An American made small gasoline engine costs twice what a Chinese one does.   But, it lasts 3 times longer, you can get parts for it, it's FAR more reliable, and even after it wears out, it's worth rebuilding again.    But not the chinese one. 

        You need to understand VALUE vs PRICE before you start blabbing your mouth.

        1. Ron Montgomery profile image60
          Ron Montgomeryposted 13 years agoin reply to this

          And you back this rant up with what?

          Do you even consider these thoughts before you submit them?

          Ralph is the one blabbing?

          More help is available...

          1. weholdthesetruths profile image61
            weholdthesetruthsposted 13 years agoin reply to this

            LOL, Ron... I back it up with many years of first hand knowledge. 

            Oh, and I happen to run a business.    You know, just loads of that first hand knowledge kind of stuff.   You now, the stuff that refutes fanciful and imaginatively invented rhetorical blather.

  4. Ben Evans profile image65
    Ben Evansposted 13 years ago

    I am a small manufacturer and I have bid and run work out of the country.  The majority of the work that I do however cannot be done off shore.

    One fact that people do not understand is that a typical shop rate for lets say a machine shop in the area is going to range between around $50 per hour to around $175 per hour depending on the machines and the machine shop.

    Now the shop rate calculation is just a simplified way to quote. After everything is said and done the shop rate includes profit as well as the wages for non production people. You are going to find that the average shop rate of a machine shop, fabricator, or basically any manufacturer that requires skilled workers is going to be around $100 per hour in the Seattle area.

    Pretty high right?  Comparable shop rates in China are going to be $30-$125 an hour and growing.  The average will be around $40.00 per hour.  While it may seem high it isn't.  Companies need to make a profit and there are many people on the inside as well as agents both in the US and China that are making very high wages.  In China also you will often see higher material prices as well as infrastructure costs like electric power and transportation over the road that is many times more expensive than it is here.  Wages for skilled workers in China aren't $.90 an hour any more either.

    I agree that we can easily compete with China on many types of projects.  I do it on a daily basis.  I am not for abolishing all corporate taxes but I do have to say many of the taxes certainly hamper businesses.

    The State of Washington alone taxes a gross rate of around .5% (rates are different for each type of business).  They call this the B&O tax and it does not seem to bad.  Well it is deadly if you don't make a profit or have low margins because it taxes the gross not the net.

    The state of Washington taxes everything.  If your phone bill would be $50.00 better add another $50 if you are a business so the phone company gets $50.00 and then there is $50.00 in taxes.

    The State of Washington give a charter to foul shill companies like Puget Sound Energy.  They are a great company and award winning company right?  They help maintain high wages and they help home owners by loans to help them reduce their energy costs.  Pretty good right?

    The bend you over if you are a business.  You have over a $1200 deposit for gas and electric (for me that is a years use of power).  They charge you $85.00 service charge above and beyond your actual use of power.  If you use around $100 a month worth of power like myself you pay $185.00 a month.  If you left for a month and used no power, well you would pay $85.00...........It sure pays to conserve doesn't it?  It is what this state thinks of business.

    Now you own your business and you are charging a moderate shop rate of $60 an hour.  How do you stay afloat if you have to pay lease upkeep power and all opex to run a business?  You have to pay sales people, people in accounting, people in purchasing, and people in management.  All this while employees demand $30 hour plus benefits.  I can tell you that you cant afford to employee people.  It is almost impossible.

    Corporate income tax is a double tax.  I am not going to go any further than that.

    The bottom line is many businesses like myself pay close to 50% or more in taxes for every gross dollar brought in. I can also tell you that I am not one of those real extremely wealthy people.

    Businesses are definitely over taxed!

    1. uncorrectedvision profile image60
      uncorrectedvisionposted 13 years agoin reply to this

      We talk about taxing business but what does that really mean?  A business doesn't really pay taxes any more than a property pays taxes or a sale pays taxes.  It is a tax on business activities.  It is a tax on people, paid by people. 

      When you tax something you suppress it.  When you subsidize something you encourage it.  As taxes on businesses rise business activity is suppressed.  What does this mean?  It means fewer jobs, less pay, less reinvestment, less expansion. 

      It means that it becomes far more difficult for a business to compete inside the country or even more difficult to compete outside the country.  It means lower return on investments and therefore diminished investment. 

      It doesn't mean business is punished.  It means all those who make their living from that business' activities pay a higher tax on their income.  That means the guys running the riveter or the brake press, the engineers, sales staff, receptionist and the officers of that company don't earn as much. 

      It means 401ks don't earn as much for the retired school teacher.  It means that wages go down, costs go up and less is produced and consumed.  Business taxes harm all of us.

  5. lovemychris profile image76
    lovemychrisposted 13 years ago

    America is not a breeding ground for business to make money,steal money, hoard money, abuse people to GETmoney, control the gvt through money.

    YOU may like the fact that Robber Barons have completely taken over--it is Un-American!!

    You have given America over to a false God.

    "Give us your poor, your hungry....."
    Not: Let the bastards come here and rob us blind.

    Profit is bullsh*t.
    Save your profit on things rich people can buy, NOT basic human services!!!

    Everything you do is geared towards Robber Baron profit: food, heat, electricity, shelter, medicine.

    THIS is what Obama and the Dems are trying to put a hold on. THIS is what you brilliant people decided YOU want: Robber Baron Rule.

    Just cause some people have no brain and no heart, the hell if we all have to suffer.

    The GOONS are now gooning it up to the hilt....have you noticed?

    You were scammed.....and taking the rest of us down with you.

    1. weholdthesetruths profile image61
      weholdthesetruthsposted 13 years agoin reply to this

      You're the most clueless poster on the topic.

  6. Don W profile image84
    Don Wposted 13 years ago

    Summary: greed is good.

    It isn't, Mr. Gekko

    1. Don W profile image84
      Don Wposted 13 years agoin reply to this

      Your analysis fails to take into account the international financial situation. The controversy about the (alleged) deliberate devaluation of the Yuan is an example of how the global economic situation plays a role in the local economy. It's not all about taxes. The picture is much bigger than that.


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